Xerox 2006 Annual Report Download - page 48

prepay without penalty any loans outstanding under or
terminate the 2006 Credit Facility.
Financial Instruments: Refer to Note 13 –
Financial Instruments in the Consolidated Financial
Statements for additional information regarding our
derivative financial instruments.
Capital Markets Offerings and Other: Refer to
Note 11 – Debt in the Consolidated Financial Statements
for additional information regarding the 2006 issuance of
our 2016 Senior Notes, 2017 Senior Notes and Floating
2009 Senior Notes, which raised aggregate net proceeds
of $1.3 billion.
Credit Ratings: During 2006, Moody’s and Fitch upgraded our credit rating to investment grade. Our credit
ratings as of January 30, 2007 were as follows:
Senior Unsecured
Debt Outlook Comments
Moody’s(1) .............. Baa3 Positive The Moody’s rating was upgraded from Ba1 in November
2006. The outlook remains positive since being upgraded
in November 2006.
Standard & Poors
(“S&P”)(2) .............
BB+ Positive The S&P rating was upgraded from BB- in March 2006
and the outlook was revised from stable to positive in
January 2007.
Fitch(3) ................. BBB- Stable The Fitch rating was upgraded from BB+ in August 2006.
(1) In November 2006, Moody’s upgraded the Senior Unsecured rating from Ba1 to Baa3, a one notch upgrade.
Moody’s maintains a Positive Outlook on the credit. In conjunction with the upgrade to investment grade ratings
for the senior unsecured debt, Moody’s has withdrawn all Loss Given Default assessments and Speculative Grade
Liquidity ratings as they are only appropriate for non-investment grade issuers. Moody’s ratings upgrades also
included: Senior unsecured shelf registration to Baa3 from Ba1; Trust preferred to Ba1 from Ba2; subordinated
shelf registration to Ba1 from Ba2 and preferred shelf registration to Ba1 from Ba2.
(2) In March 2006, S&P upgraded the Senior Unsecured and Corporate Credit rating from BB- to BB+, a two notch
upgrade. At the same time, S&P revised its outlook from Positive to Stable on all associated ratings, affirmed the
short-term speculative-grade rating at B-1 and upgraded the ratings on Subordinated debt from B to BB- and
Preferred Stock from B- to B+. As a result of the rating change, S&P removed Xerox from Credit Watch in March
2006. In January 2007, S&P revised its outlook from Stable to Positive on all associated ratings.
(3) In August 2006, Fitch upgraded its debt ratings and assigned a stable outlook on Xerox. Fitch had upgraded the
senior unsecured debt of Xerox from BB+ to BBB- and also upgraded the Trust Preferred securities from BB- to
BB, both one notch upgrades. In March 2006, Fitch affirmed its ratings and positive outlook on Xerox in
conjunction with its 2016 Senior Notes offering. Fitch had upgraded the senior unsecured debt of Xerox from BB
to BB+, and also upgraded the Trust Preferred securities from B+ to BB-, both one notch upgrades in August
2005.
Our credit ratings, which are periodically reviewed
by major rating agencies, have substantially improved
over the past three years. Even though as of January 30,
2007, our current S&P credit rating still remains below
investment grade, we expect effective implementation of
our management strategies will return the company’s
senior unsecured debt to investment grade by all major
rating agencies in the future.
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